Google has become the utility of the digital age, something we click on as much as we flick on a light switch or turn on the water tap. Now the search giant is literally getting into the utility business with the development of smart grid software that gives consumers real-time information on their electricity consumption.

Called the PowerMeter, the prototype online dashboard is designed to download data from smart meters and display current electricity use and show how much power your refrigerator, big-screen television and other appliances are using at any point in time.

“We believe that by building a ‘smarter’ electricity grid, we can use the synergies of information and technology to give consumers better tools to track and reduce their energy use and, by doing so, save money and reduce greenhouse gas emissions,” wrote engineering executive Bill Coughran and Dan Reicher, Google.org’s director of climate change and energy initiatives, in a filing Monday with the California Public Utilities Commission. “Down the road, consumers should have access to additional information such as the source and mix of their power.”

The Google (GOOG) executives urged California regulators to adopt policies to give consumers direct access to their real-time electricity usage in an open-source format. “The goal is to foster a thriving ecosystem of partners where third-parties develop and provide products to help consumers decrease and manage their energy demand and save money,” Coughran and Reicher wrote. “For example, a third-party could offer a service that analyzes a household’s electricity usage data, identifies inefficient appliances or practices in the home, and offers tips on how to reduce energy or provides special discounts on efficient appliances or electronic equipment.”

Utilities across the country are rolling out so-called smart meters that allow the real-time monitoring of electricity use, letting them charge variable rates depending on demand. The idea promoted by Google and other smart grid proponents is that once people become aware of how much electricity their various appliances and gadgets consume – and how much it costs them – they’ll start, say, running the dishwasher at night when electricity demand and rates are lower. That will help utilities cut their costs and over the long run avoid building new carbon-spewing power plants to meet peak demand.

Google says PowerMeter, now being tested among Google employees, will be a free, open source application. “Google tool is only one of many ways to provide consumers with this information,” the company stated in its utilities commission filing. “Our primary goal is for consumers to get this information, whether through our tool or another source.”

It remains to be seen how the Google initiative affects the fortunes of startups like Tendril, Greenbox and others developing software and services for utilities to let their customers monitor their electricity consumption.

Google says it’s currently working with utilities and device makers. Green Wombat is waiting to hear back from Google on which ones, but a good bet would be General Electric (GE), which struck a partnership last year with the search giant to develop smart grid technology. Also likely on the list is PG&E (PCG), which has been collaborating with Google on plug-in hybrid electric car and vehicle-to-grid research.

Then there’s IBM (IBM), which has become the leading player integrating smart grid technology for utilities and managing the data produced by a digital power grid. (Big Blue last week announced it is building the world’s first nationwide smart grid for the Mediterranean island nation of Malta.)

So will Google PowerMeter save consumers money while saving the planet? That’s the early word from Google employees – not exactly the most neutral of sources – who’ve been testing the smart grid app, according to testimonials Google posted online.

“By monitoring my energy use, I figured out that the bulk of my electricity was caused by my two 20-year-old fridges, my incandescent lights and my pool pump, which was set to be on all the time,” wrote “Russ, hardware engineer.” “By replacing the refrigerators with new energy-efficient models, the lights with CFLs and setting the pool pump to only run at specified intervals, I’ve saved $3,000 in the past year and I am on track to save even more this year!”

SAN FRANCISCO – Google and General Electric said Wednesday that they will collaborate on developing geothermal power as well as technology to enable plug-in vehicles to return electricity to the grid.

During Google’s (GOOG) annual Zeitgeist conference at its Silicon Valley headquarters, Google CEO Eric Schmidt and GE (GE) chief Jeff Immelt said the two giants also would team up to push for policy changes in Washington to develop smart electricity grids to allow the widespread deployment of renewable energy.

“There’s two fundamental things that have to be done, and which we’re working with Google on,” said Immelt before an audience that included former Vice President Al Gore. “One, there has to be more capacity. The second thing is there has to be a smart grid to allow it to operate more effectively. That’s primarily software. We make the hardware.”

Schmidt quizzed Immelt about the impact of the Wall Street meltdown on green energy. “Will the craziness of last week screw some of this stuff up?” asked Schmidt. “Are we going to get set back for years because of all the shenanigans in the financial industry?”

“People should be concerned but not panicked,” replied Immelt. “The federal government is doing the right thing.”

Gore was not so sanguine, noting that Congress has failed repeatedly to extend crucial investment tax credits for renewable energy. “While Congress is voting on oil drilling and leasing oil shale – which is a move that would be game over for the climate crisis – they’re preparing to filibuster over renewable energy tax credits,” he said.

Google and GE are among scores of Fortune 500 companies that have lobbied Congress to extend the investment tax credit and the production tax credit, which is particularly important to the wind industry. ”

“I’m a lifelong Republican and I believe in free markets but over time we worship false idols,” says Immelt. “Sometimes we think the free market is whatever the price of oil is today. In the end, clean energy is both a technology and a public policy.”

He noted that because the production tax credit allowed the wind industry to scale up, wind-generated electricity now costs about six-to-seven cents a kilowatt hour, down from 15 cents 15 years ago.

“We bought Enron’s wind business for a few million dollars and now it’s worth $7 to 8 billion,” Immelt said. “I’ve made some bad decisions but that wasn’t one of them.”

Google in August invested nearly $11 million in geothermal companies developing so-called enhanced geothermal systems technology to allow the earth’s heat to be tapped nearly anywhere and turned into electricity. On Wednesday, Google and GE said they will work on technology to transform geothermal into a large-scale source of green electricity.

In a statement, the two companies said they will also “explore enabling technologies including software, controls and services that help utilities enhance grid stability and integrate plug-in vehicles and renewable energy into the grid.”

Google on Tuesday took the drilling debate in a different direction – announcing that Google.org is investing nearly $11 million in technology to expand the nation’s geothermal reserves. That’s more than the U.S. government is spending on geothermal projects this year.

Traditional geothermal power plants, like those built by Calpine (CPN) in Northern California, sit atop reserves of naturally occurring steam or hot water that can be tapped to drive electricity-generating turbines. So-called Enhanced Geothermal Systems, or EGS, hope to tap geothermal energy in any location by drilling deep underground to fracture “hot rocks” and then pump them with water to create steam that can be used in a power plant. The great potential, of course, would be to liberate the Midwest and South from their dependence on coal-fired power plants.

“While the U.S. debates drilling in the ocean for oil, we are focused on drilling for renewable energy – and lots of it – right beneath our feet,” Google.org said in a statement, citing a Massachusetts Institute of Technology study that estimates the accessible heat below the U.S. represents more than 2,500 times the nation’s annual energy consumption. (A Google.org video on geothermal is above.)

Google.org (GOOG), the search giant’s philanthropic arm, will invest $6.25 million into AltaRock Energy, a Sausalito, startup, developing EGS technology. The investment is part of $26.25 million round of funding AltaRock revealed on Tuesday. Other investors include marquee green-tech venture capitalists Khosla Ventures and Kleiner Perkins Caufield & Byers.

Potter Drilling, a Redwood City, Calif., company developing hard-rock drilling technology to be used for geothermal, scored $4 million from Google.org. Other investors include MIT.

Google.org is granting the Southern Methodist University Geothermal Laboratory $489,521 to map North America’s geothermal reserves.

The geothermal funding is the latest investment in renewable energy by Google. It has invested in solar power plant companies BrightSource Energy and eSolar as well as in high-altitude wind company Makani and various ventures related to plug-in hybrid electric cars.

HALF MOON BAY, Calif. – Green Wombat has been at Fortune’s Brainstorm Tech conference the past few days, the highlight of which for me was leading a session on energy with Vint Cerf. Known as the “father of the Internet” for his role in co-creating its underlying technology, Cerf is now a Google (GOOG) vice president and its chief Internet evangelist.

The idea: Brainstorm with 40 high-powered participants – everyone from Idealab’s Bill Gross (chairman of solar power plant company eSolar) to Stan Williams of Hewlett-Packard’s (HPQ) Quantum Systems Labs to venture capitalist Richard Wong of Accel Partners. The task we set out: Devise solutions to Al Gore’s challenge last week for the United States to obtain 100% of its electricity from renewable energy by 2018. Piece of cake.

Sorry, Al, we didn’t come up with a 12-step plan to kick America’s addiction to the black stuff – oil and coal. But the wide-ranging discussion underscored the complexity of the challenge and the fact that a solar-power-plant and wind-farm building boom is but one part of the big fix.

First, said one participant, we must create the “energy Internet.” In other words, a smart transmission grid that can get electricity generated from desert solar power stations and High Plains wind farms to other regions of the country as well as manage “distributed energy” from such things as rooftop solar panels. Another technological challenge that must be overcome: energy storage to capture electricity produced by solar and wind power stations for use when the sun isn’t shining and the wind isn’t blowing.

For many in the room, just as critical is the need to reduce energy demand, increase public awareness and devise the right economic incentives to promote green power and lower electricity consumption. As more than a few participants noted, Americans use more than twice as much electricity per capita as Europeans.

Gross suggests establishing a floor on electricity prices – say 10 cents/kilowatt hour – to allow renewable energy companies to get up and running and achieve economies of scale to compete against coal and natural gas.

Given the techie crowd – Silicon Valley is just over the hill from Half Moon Bay – some of the more interesting ideas were about how to use software and Web 2.0 tools to change consumer behavior and awareness about energy consumption. For the home there needs to be an energy meter that provides constant feedback on the electricity usage – and the charges incurred – of individual appliances and gadgets, like that laptop you left plugged in. Your mobile GPS-enabled phone could monitor your driving habits, suggesting ways to consolidate trips, report your fuel efficiency and ping you about your home energy use. Another idea; Embed carbon footprint data in individual products, so that consumers can scan them with their phones when making purchasing decisions.

(Another provocative idea that Cerf discussed with me before the session: How to re-architect the suburbs when the aging baby boom generation begins to abandon their McMansions in search of housing and a lifestyle less isolated and closer to shops and services.)

Beyond technological innovation, the overriding sentiment was that the president and Congress must show leadership in establishing a national renewable energy policy that commits the resources and sense of urgency of a 21st century Manhattan project.

Coincidentally, the day before the session I moderated a panel at Google on renewable energy sponsored by the California Clean Tech Open, a contest that provides seed capital and services to incubate green startups with promising business plans. This year’s finalists, announced Tuesday, include several companies developing software and services to monitor and cut home and business energy consumption. Judging by the overflow crowd – some 350 people with a line out the door – there’s no shortage of talent in the Valley interested in green tech.

Among those present was Bob Cart, CEO of San Francisco-based Green Volts, which is developing concentrating photovoltaic power plants. Green Volts was a 2006 Clean Tech Open winner and Cart told Green Wombat that less than two years later the company is breaking ground this week on its first power plant, which will generate two megawatts of electricity for utility PG&E (PCG).

Green tech innovation can come from some improbable places. Rock star and home-brew technologist Neil Young closed out Brainstorm Tech on Wednesday by taking the stage for an interview with Time Inc. editor-in-chief John Huey. Young has been working with a far-flung group of technologists and auto enthusiasts to convert a 1959 Lincoln Continental Mark IV into a 100-mpg, Internet-enabled bio-electric-hybrid. He told Huey the Continental is just one of several green car projects he has under way.

“We have an onboard fuel creation device on an Envoy in Adelaide, Australia,” Young said. That prompted Cerf to ask from the audience, “You mentioned onboard fuel production. This car doesn’t happen to run on piss, does it?” Young laughed, “It could.”

The songwriter and political provocateur said he was focusing on land yachts – the Continental stretches to 19.5 feet. “Americans, a lot of them are big, and they like big cars and long highways.”

The souring economy hasn’t dissuaded green tech investors from making big bets on renewable energy. On Wednesday, solar power plant builder BrightSource Energy announced it had raised $115 million from a group of investors that include Google.org, the search giant’s philanthropic arm, and oil giants Chevron and BP.

The investment in the Oakland, Calif.-based startup is Google’s (GOOG) second big solar energy play in the past two months. In April, Google.org joined a $130 million round for eSolar, a Pasadena solar power plant company whose chairman is Idealab founder Bill Gross.

BrightSource Energy, started by American-Israeli solar pioneer Arnold Goldman, has contracts to supply California utility PG&E (PCG) with up to 900 megawatts of solar electricity from power plants to be built in the Mojave Desert on the California-Nevada border. BrightSource has developed a new solar technology, dubbed distributed power tower, that focuses fields of sun-tracking mirrors called heliostats on a tower containing a water-filled boiler. The sun’s rays superheat the water and the resulting steam drives an electricity-generating turbine. (Artist rendering of BrightSource’s planned Ivanpah plant above.)

Given that a 500-megawatt solar power plant can cost more than $1 billion to build, $115 million is but a drop in the bucket. But it will allow BrightSource, which previously raised $45 million, to proceed with the development of its technology as it seeks project financing for construction of its first power plants.

And it can’t hurt to have such high-profile backers when you negotiate power purchase agreements with utilities. Besides Google, BP Alternative Energy (BP) and Chevron Technology Ventures (CVX), previous investors participating in the new round include Morgan Stanley (MS), VantagePoint Venture Partners, Draper Fisher Jurvetson and DBL Investors.

Another new BrightSource investor is Norweigan oil and gas behemoth StatoilHydro (STO). Apparently, even Big Oil has seen the light when it comes to hedging its bets with green energy.

PASADENA, Calif. — Solar power plant builder eSolar has raised $130 million from Google’s philanthropic arm, Google.org, and other investors.

That was the headline news that eSolar chairman and Idealab founder Bill Gross slipped to Green Wombat during dinner Sunday night as Fortune’s Brainstorm Green conference kicked off in Pasadena. The other investors include Idealab and Oak Investment Partners. Big numbers grab attention but the far more interesting angle is the technology that eSolar is developing. If it lives up to its claims, eSolar could help break the logjam that has put Big Solar on the slow track in California.

“We just completed tests at our test site this week and we will be able to produce electricity that is competitive with coal,” said an animated Gross Sunday evening.

That is the Holy Grail of renewable energy and the charge set out by Google (GOOG) founders Sergey Brin and Larry Page when they launched their green power initiative, RE<C (Renewable Energy less than Coal), in November. Google.org subsequently invested $10 million in Pasadena-based eSolar. (eSolar did not say how much of the $130 million Google.org ponied up in the latest round.)

eSolar has been operating in stealth mode but Gross shared details of the company’s technology and how it intends to produce greenhouse gas-free electricity so cheaply — a claim sure to be met with some skepticism by competitors like Ausra, BrightSource Energy and Solel.

At first glance, there doesn’t seem much radically different about an eSolar solar thermal power plant — it’ll use fields of mirrors to focus the sun’s rays on a tower containing a water-filled boiler. The resulting heat will create steam that will drive an electricity-generating turbine.

The tipping-point innovation, according to Gross, is the mirrors and the software that controls them as well as the modular design of the power plants.

While Oakland, Calif.-based BrightSource is developing a similar system, Gross says eSolar is able to use smaller mirrors — called heliostats — that can be cheaply mass produced from off-the-shelf glass like that used in bathroom mirrors. Proprietary software developed by eSolar controls each sun-tracking mirror, increasing their efficiency to produce more electricity. “It’s all about the software,” Gross said.

Smaller more powerful solar fields means that eSolar can build power plants on far less land than competitors for less money, according to Gross. For instance, a 500-megawatt solar power plant can cost more than $1 billion to build and requires thousands of acres of land — which is why most will built in remote deserts. But eSolar plans to build modular, 33-megawatt power plants that can be constructed on a couple hundred acres and plugged into existing transmission lines near urban areas.

“We’ve already bought up rights to enough land to produce more than a gigawatt of electricity,” said Gross, showing Green Wombat a map of California polk-a-dotted with the locations of potential eSolar power plants. A gigawatt can power about 750,000 homes.

The small size of each power plant has another benefit — solar thermal power stations under 50 megawatts do not have to be licensed by the California Energy Commission. That means eSolar can cut at least a year or two off the process of getting a solar power plant online.

That will certainly be attractive to the Golden State’s big utilities — PG&E (PCG), Southern California Edison (EIX) and San Diego Gas & Electric (SRE) — which face a mandate to obtain 20 percent of their electricity from renewable sources by 2010 and 33 percent by 2020.

Although all those utilities have signed massive megawatt deals with solar energy companies, no plant has been yet built.

Gross says that while eSolar has been talking to the utilities it’s not going to wait to have a power purchase agreement in hand before building its first plant.

About Green Wombat

Green Wombat is written by
Todd Woody, a veteran environmental journalist based in California who writes for The New York Times, the Los Angeles Times, Grist and Yale e360. He's one of the few people on the planet who have held a northern hairy-nosed wombat in the wild.

Todd formerly was a senior editor at Fortune magazine, an assistant managing editor at Business 2.0 magazine and the business editor of the San Jose Mercury News.